March 5, 2002
‘7’
MERGERS AND ACQUISITIONS CREATING SHAREHOLDERS VALUE
The Union Minister of Law, Justice and Company Affairs, Shri Arun Jaitley has said that Indian Corporate Sector should be globally competitive in the emerging market driven economy. Inaugurating a seminar on Mergers and Acquisitions: Creating Shareholder Value under the aegis of Northern India Delhi Chapter of Confederation of Indian Industry (CII) here today, Shri Jaitley said that India has come away from the regulated economy. Now was the time for faster Mergers and Acquisitions (M&As) designed to create wealth for shareholders and investors. He said that the impact of takeovers on the value of shares and markets was automatic.
Talking of the current scenario of M&As, the Law Minister said that more and more businesses were going to shed non-core activities and small companies going to have greater access to capital markets with benefits of tax concessions. Other areas related to procedural component now being dealt with under the Companies Act, which with the proposed amendment would move away to the National Company Law Tribunal with a new Insolvency Law in position. Besides, mergers and demergers required approval of creditors. If creditors’ interests were otherwise protected was there still further need to protect their interest. The other areas relating to M&As required a minimum timeframe with speed and efficiency
in the interest of business strategy, capital markets and financial strategies, process and future trends as we were moving to tribunal. The second area related to Competition Law which aimed at prevention of anti-competition abuse, abuse of dominance through M&As as size today was not per se discouraged. However, misuse of dominance operating below market cost to drive out competition through pre-datory pricing and marketing were the important areas of the proposed Competition Bill. The Minister said that business today dictated the necessity of M&As as some M&As had adverse effect on competition.
The Minister talked at length about the efficacy of regulators and said that cross border jurisdiction of regulators was the major issue for consideration. Other areas related to advantages that might accrue to market driven economy under regulators , which would be manned by experts to be guided by sound market reality and the need for the Government to respect the decisions of regulators and allow them to function independently. The Minister also talked of the need for professionally competent and tall men in regulators whose decisions must be respected to let free market force with attendant competition and quality govern the economy.
The seminar is intended to discuss all aspects of M&As relating to business strategy, capital markets and financial strategies, process and future trends.